AWEA and SEIA Call for Refundable Renewable Energy Tax Credits

Washington, D.C., United States [RenewableEnergyWorld.com]
Barack Obama will be sworn in as President of the United States next week and as his administration takes over the reins of the republic, the renewable energy industries will be watching closely. Obama has said that he plans for the government to invest US $150 billion in renewable energy and hopefully double generation capacity from renewable sources by 2010. His proposed economic stimulus package could be the vehicle that will deliver on those goals.

"We can continue to grow through this difficult period only if the new Administration and the 111th Congress act immediately to make renewable tax incentives refundable so they can work as they are intended to -- even in the current financial context. This is a critical first step to building the new, clean energy economy."
-- Denise Bode, CEO, American Wind Energy Association

The industries will, however face the reality of dramatic reductions in installation figures in 2009 if Congress and the incoming Administration do not take action to help make renewable tax incentives work better in today's slow economy, which has already seen a number of renewable energy companies, including Optisolar and SunEdison, cut jobs in response to lower investment dollars and fewer business deals. The keystone of the action plan that SEIA and AWEA are calling for is making both the investment and production tax credits refundable in order to give more parties access to them.

AWEA CEO Denise Bode and SEIA President and CEO Rhone Resch both cited the need to make the ITC and PTC refundable to preserve their effectiveness in the current economic climate and maintain the very strong growth of both industries.

"Congress must use the stimulus bill to move us away from our backwards-looking, recession-burdened economy and toward a new-era of recovery and prosperity with solar and wind leading the way. Our industries have become powerful economic engines in the U.S., each year creating tens of thousands of new jobs and billions of dollars in economic investment. And we have the potential to put millions more Americans back to work. But due to the recession, projects are now being put on hold, factories are closing and workers face potential layoffs unless Congress refines the tax credits now so they work as originally intended," Resch said.

The solar energy industry employs more than 80,000 people in the U.S. and created more than 15,000 jobs in the last two years. According to a 2008 report issued by Navigant Consulting, the solar energy sector alone will create 440,000 permanent jobs and spur US $325 billion in private investment by 2016 with the ITC in place.

AWEA estimates that last year the wind industry installed a record 7,500 megawatts (MW) of capacity in the U.S., bringing total wind capacity in the U.S. to about 24,000 MW. The solar industry is estimated to have nearly doubled the growth of solar PV installations in 2008.

"We applaud President-elect Obama's aggressive goal of doubling the production of alternative energy in the next three years. Wind energy is ready to do its part, but we face a major obstacle in this economic downturn," Bode said.

"We can continue to grow through this difficult period only if the new Administration and the 111th Congress act immediately to make renewable tax incentives refundable so they can work as they are intended to — even in the current financial context. This is a critical first step to building the new, clean energy economy."

In 2007 and 2008, more than 50 wind energy manufacturing facilities were opened, expanded or announced in the U.S., adding 14,000 employees. More than half of those jobs were added in 2008, even as the overall U.S. economy was faltering.

On October 3, Congress passed extensions of the ITC and PTC. Bode and Resch noted that current economic conditions substantially reduce the effectiveness of these tax credits since most companies and individual tax filers expect lower, if any, tax liabilities. If the credits were refundable then those without tax liabilities that need to be offset with a credit would simply receive a government refund check. Making renewable tax credits refundable, like those for biodiesel and other alternative transportation fuels, could go a long way to ensuring continued wind and solar industry growth in 2009 and 2010.

In terms of the added cost that the changes would bring, both Resch and Bode said that the increased cost of making the tax credits refundable would be negligible. It would be tantamount to more businesses, utilities and other entities taking advantage of the tax credits in their current structure.

Both groups said that they have been in touch with the tax staffs of members of Congress in addition to the Obama transition team. The changes to the tax credits are not included in the draft text of the stimulus bill that has been circulating.

Both Resch and Bode said that the main stumbling block is precedent. In other words, the tax staffers are saying that they have never seen a change like this made to a tax credit and there are questions about how it would be codified into legislation. The industry is hoping that public opinion and Obama's announcement to double generation capacity will make up for any lack of will on the part of Congress.

"The American public overwhelmingly supports renewable energy and these policies. Our elected leaders have an opportunity to support renewable energy in the stimulus bill that will keep these vitally important industries growing in the U.S.," Resch said.

To hear clips from the joint news conference put on by SEIA and AWEA, click on the links below.

8 Comments

If the installation of renewable energy generators is financially worth while people will invest in it. It is as simple as that. There are a number of measures that any government could take to half the cost of house insulation, solar electric equipment, electric cars, home wind turbines, commercial wind turbines and so forth.
http://mtkass.blogspot.com/2007/07/solar-electric-government-role.html

re above on geo, it also does most of your hot water. Air to air heat pumps are also in the mix where there are space or cost restrictions. Particularly for retrofits with our old dense housing in the northeast. Mitsubishi and Fujitsu have inverter based multi-stage equipment that will cover most or all of the heating in most of the northeast. In some cases back up is needed. I think Carrier is selling an integrated system with an air to air heat pump and gas furnace back up. I'm not sure how low a temp the air to air goes to. One Fujitsu model goes to 15F, another goes to 0F. Hallowell out of Maine is making a multi stage unit good to -30F. I think stage 4 may be electric resistance. In general, solar thermal on new properly designed, insulated and oriented buildings or geothermal or air to air in that order. On retrofits, geo first choice air to air second.

Then there is the copper wire problem.....off shore wind needs under sea transmission cables and that means on shore grid connections and lots of copper.

We are getting our first two turbine generator for a large island; but will still have to maintain a conventional generator to make power when the wind dies down.

Just attended the big organizing kick off yesterday of Maine's SMALL WIND WORKING GROUP yesterday. About 3/4ths of the people who showed up left before the end, despite an availability of $4,000 grant subsidies...I think the $50k price tag and all the problems and regulations and requirements---you need a full energy audit, no you can't install it yourself you have to hire a licensed electrician, etc. discouraged a lot of farmer participants and others.

Some suspect that if history is a guide; a tax credit will only encourage inflated prices.

Other modalities have similar problems that aren't overcome by more subsidies and credits.....the paperwork burden by government agencies is very discouraging....give you an example. The organizers of the meeting---paid out of a grant, suggested that each person getting a wind grant provide output data to a central data base, after all the public wants to know if its getting it's money's worth.

I asked whether the grant amount would be expanded to cover the $600+ anenometer, installation, and other logging equipment so wind speed and generator output could be correlated with siting data.

The answer was no extra money to cover data logging.

This is just wind; solar thermal which should be a no-brainer runs into a thicket of problems because most of the housing stock is old and retrofits are a major problem. Just took a pic of my neighbors fancy double vac tube installation covered with frozen snow...ah winter!

What appears to be happening is that the real winner is geothermal...you get heat and air conditioning in one box; so a $6k solar thermal installation may get scrapped.

Phase in an eventually heavy carbon tax over the next 5 - 10 years, cap and trade until the tax is fully implemented, level the playing field, tax what we wish to disincentivize (coal, oil), provide tax credits for what we want to see ... solar and wind energy to replace foreign sources of oil in the near term and all oil, gas, and coal in the long term, supplemented by the gamut of renewable and sustainable energy sources ... and slow global warming by keeping CO2 to under 350 ppm. Build no new nuclear or coal-fired facilities ... and eventually systematically, as possible, shut down existing plants. Invest in clean coal technology development research (and once and for all prove that it is a poor solution ... retraining coal industry workers in green collar jobs) and use MUCH less energy (efficiency and non-use when possible ... and there is a lot of room to reduce energy use) and ... voila ... we have a solution. We'll see if this gets done or if the lobbies are stronger than the will of the American people and the incoming administration.

The sad reality of these companies (Innovalight, Nanosolar and many others) is that much of what they say is marketing and "forward looking statements." They promise the world and have yet to deliver. We have heard wonderful theories with little substance or working prototypes. Don't get me wrong; I think they are developing great technologies. The hype surrounding them has to be tempered by what is actually happening: they haven't delivered.

Innovalight claims $1/watt cells. Nanosolar cells are probably cheaper than that. So one trillion dollars buys us a TerraWatt. There is plenty of room in the SouthWest to put a big array. Better yet, put an array on the roof of every building and save on transmission lines.

If Innovalight has trouble printing ten billion square meters of cells, just sell us the ink, so we can put 10 million inkjet printers to work in parallel. Ten million printers can print 1000 square meters each in less than one month.